Samsung Elec shares rally on Intel’s chip outsourcing plan

FILE PHOTO: A customer stands near Samsung logo during Galaxy Note 8 consumer launch event in Jakarta, Indonesia September 29, 2017. REUTERS/Beawiharta

SEOUL (Reuters) – Shares of Samsung Electronics (005930.KS) rallied on Tuesday, joining its bigger rival TSMC (2330.TW), driven by growing expectations that the chipmakers may benefit from Intel Corp’s (INTC.O) plan to outsource more chip manufacturing.

Shares of Samsung Electronics rose as much as 5.8% at one point to their highest level in about five months and were on track to finish higher for a third consecutive session.

Intel said on Thursday its new 7-nanometer chip technology was six months behind schedule and it would consider farming out more work to outside semiconductor foundries. The U.S. chipmaker also said on Monday that its chief engineering officer had left the company.

“Samsung could benefit as Intel will outsource more chip manufacturing,” Nomura analyst C.W. Chung said.

“The foundry business accounts for a small portion of Samsung’s total revenue, but this does not mean that the foundry industry is small.”

Shares of Taiwan Semiconductor Manufacturing Co Ltd (TSMC) also extended gains on Tuesday, jumping 5% after hitting a record-high on Monday on Intel’s woes.

With a market value of 11.66 trillion new Taiwan dollars ($398 billion), TSMC has a higher market capitalisation than Samsung Electronics, a diversified tech giant which is valued at 369.18 trillion won as of Tuesday. ($1 = 1,193.5600 won)

Samsung Electronics is taking on TSMC in the chip contract manufacturing business, announcing last year a plan to invest 133 trillion won ($111.43 billion) in non-memory chips through 2030.

Samsung, the world’s top memory chipmaker, also makes displays, smartphones and TVs, among others.

Reporting by Hyunjoo Jin and Joyce Lee; Editing by Kim Coghill